FACTORS AFFECTING THE PROFITABILITY OF NON-BANK FINANCIAL INSTITUTIONS OF BANGLADESH: A PANEL DATA ANALYSIS
Author(s)
Md. Yousuf Harun, Md. Sayeem - Bin – Hafiz, Sultana Sharmeen KarimAbstract:
This paper attempts to reveal the bank specific, industry specific as well as macroeconomic determinants affecting the profitability of NBFIs operating in Bangladesh for a time span of 2009-2014. In order to identify the impact of different variables on profitability of NBFIs random effect regression model was used on the panel data series. The proxy variables for profitability were ROA and ROE of sample firms. Findings reveal that the existence of positive and significant effect of credit risk, bank size, non-traditional activity, concentration on profitability when measured in terms of both ROA and ROE. Capital adequacy and stock market concentration is positively and significantly related to profitability when measured only by ROA. On the other hand, inflation has significant negative impact upon profitability when measured with ROA.
Keywords: NBFIs, ROA, ROE, Panel Data, Random Effect, Bangladesh